SINGAPORE: Gold traded little changed on Monday on a lack of conviction the US Federal Reserve would take measures to stimulate the economy anytime soon even after a disappointing jobs report.
US non-farm payrolls increased by just 80,000 in June, lower than a forecast of 90,000, raising pressure on the Fed to do more to help the frail recovery.
"The market is not sure where prices should go and the sentiment is fragile," said Lynette Tan, an analyst at Phillip Futures, adding that prices are likely to remain rangebound for the time being with investors stuck in data-watching mode.
Though June's payrolls increase fell short of expectations, it still exceeded the May number and could be seen as a slight improvement, putting a damper on hopes for a third round of quantitative easing from the Fed, Tan added.
On June 1, gold jumped 4 percent at a surprisingly weak employment report which fuelled talks of further monetary easing from the Fed. The central bank's stance on easing has played a major role in the gold market this year.
Spot gold dropped to its lowest in almost two weeks of $1,575.89 an ounce -- around its 61.8 percent retracement level on a rally in late June triggered by a euro zone deal, before paring most losses to trade at $1,581.70 by 0643 GMT.
However, Reuters market analyst Wang Tao expects spot gold to fall to $1,540 an ounce during the day.
US gold futures contract for August delivery edged up 0.2 percent to $1,581.90.
The dollar and Treasuries trumped gold as top destinations for the flight to safety, as investors fretted about the global economic outlook with euro zone fighting its debt crisis and China showing signs of an economic slowdown.
Asia's two biggest exporters, China and Japan, showed further signs of slowing down in data published on Monday, signalling risks of a fresh slide in global demand.
In the United States, while the latest weak jobs data has raised the chance in favour of the Fed launching a new round of monetary stimulus to 65 percent from 50 percent in late June, Wall Street economists polled by Reuters mostly expect it to happen only by the year-end.
Asia's physical gold market has been sluggish for a while, as the rangebound prices have done little to excite investors.
"India is not even responding to the stronger rupee," said a Singapore-based trader. "Physical supply seems high and scrap is coming into the market."
Hedge funds have also moved to the sidelines of the market as volatility has been on the decline since early June, he added.
Comments
Comments are closed.